Poulton v. State Farm Fire and Cas. Cos.
| Decision Date | 12 March 2004 |
| Docket Number | No. S-02-1418.,S-02-1418. |
| Citation | 675 N.W.2d 665,267 Neb. 569 |
| Parties | Thomas POULTON and Karen Poulton, Appellants v. STATE FARM FIRE AND CASUALTY COMPANIES, Appellee. |
| Court | Nebraska Supreme Court |
David A. Hecker, Angela D. Melton, Lincoln, and Richard P. Jeffries, of Kutak Rock, L.L.P., Omaha, for appellants.
Joseph E. Jones and Andrea F. Scioli, of Fraser, Stryker, Meusey, Olson, Boyer & Bloch, P.C., Omaha, for appellee.
Due to mold and fungi in their home, Thomas Poulton and Karen Poulton suffered a significant loss of personal property. Seeking compensation for their loss, the Poultons filed a claim with their insurer, State Farm Fire and Casualty Companies (State Farm). State Farm denied the claim, and the Poultons sued State Farm for coverage. The trial court determined the Poultons' insurance policy did not provide coverage and dismissed their petition. The issue on appeal is whether the Poultons' personal property is covered under the "resulting loss" provision of their policy.
On June 23, 2000, the Poultons purchased real estate in Omaha, Nebraska. Shortly thereafter, they noticed a mold and fungi infestation problem in their home. This problem, the Poultons claim, caused them to suffer the loss of all of the personal property that they had placed inside of the home. Seeking compensation for the damage, the Poultons turned to their insurer.
The Poultons had insured their property under a homeowner's policy of insurance (the Policy) issued by State Farm. On September 25, 2000, the Poultons made a claim to State Farm for loss of their personal property caused by a mold and fungal infestation of their home. Upon receiving notice of the claim, State Farm sent an adjuster to investigate the Poultons' loss. After the investigation, State Farm sent a letter to the Poultons, dated October 6, 2000, denying coverage. The letter stated that State Farm was denying coverage because the Poultons' loss was not caused by 1 of the 16 named perils in the section of the Policy dealing with insured losses to personal property.
On November 29, 2000, the Poultons, via letter, sought reconsideration of State Farm's determination. The Poultons argued that coverage for their personal property existed under the plain language of the policy. In addition, the Poultons argued that their loss was the direct result of a mold and fungal infestation of their home and, therefore, was covered as a resulting loss under the Policy.
On December 19, 2000, State Farm denied coverage for a second time. State Farm repeated its position that the Poultons' loss was not caused by 1 of the Policy's 16 named perils and that therefore, the Policy did not cover their loss. In addition, State Farm argued that the resulting loss provision, properly interpreted, did not provide coverage for the loss of personal property.
The Poultons then filed a petition for declaratory relief in district court. The petition requested a declaration that the Policy covered the Poultons' loss and an order requiring State Farm to pay the Poultons for the damage sustained to their personal property. After State Farm answered, a trial on stipulated facts was held; thereafter, the district court entered a judgment in favor of State Farm. The court determined that (1) the Policy was a "specific risk" policy that did not provide coverage for damage to personal property caused by mold or fungi, (2) the resulting loss provision applied only to structural damage to the dwelling and not to personal property damage, and (3) the Policy was not ambiguous. The Poultons' petition was dismissed with prejudice, and they subsequently filed a timely notice of appeal.
The Poultons assign three errors, more properly restated as two: the district court erred in determining that (1) the Policy's resulting loss provision did not cover damage to their personal property and (2) the Policy is not ambiguous.
The meaning of an insurance policy is a question of law, in connection with which an appellate court has an obligation to reach its own conclusions independently of the determination made by the lower court. R.W. v. Schrein, 264 Neb. 818, 652 N.W.2d 574 (2002).
Obviously, the focus of this appeal is the coverage provided under the Policy. Before examining the relevant provisions, however, a brief overview of the Policy will provide context for our subsequent analysis. The Policy's table of contents shows that the Policy is divided into five parts and a number of subparts. Here, the disputed provisions are found in Section I, which is entitled "SECTION I—YOUR PROPERTY." The table of contents, with respect to Section I, is as follows:
SECTION I—YOUR PROPERTY COVERAGES ......................... 3 Coverage A-Dwelling ............... 3 Coverage B-Personal Property ...... 3 Coverage C-Loss of Use ............ 4 Additional Coverages .............. 5 Inflation Coverage ................ 7 LOSSES INSURED ..................... 7 LOSSES NOT INSURED ................. 9 LOSS SETTLEMENT ................... 11 CONDITIONS ........................ 13
In the body of the Policy, under the provision entitled "COVERAGES," the Policy states that under "Coverage A," State Farm covers the "dwelling used principally as a private residence on the residence premises shown in the Declarations." As to personal property, the Policy states that under "Coverage B," State Farm covers "personal property owned or used by an insured while it is anywhere in the world."
Under the provision entitled "LOSSES INSURED," the Policy divides itself into two categories of covered losses: (1) "COVERAGE A—DWELLING" and (2) "COVERAGE B—PERSONAL PROPERTY." They state:
1. Fire or lightning.
2. Windstorm or hail....
....
3. Explosion.
4. Riot or civil commotion.
5. Aircraft....
6. Vehicles....
7. Smoke....
8. Vandalism or malicious mischief....
9. Theft....
10. Falling objects.....
11. Weight of ice, snow or sleet....
12. Sudden and accidental discharge or overflow of water or steam....
16. Breakage of glass....
This action arises out of a claim for damage done to personal property; therefore, we turn to Coverage B—Personal Property. As listed above, Coverage B sets forth 16 specific perils for which personal property damages are covered. Because the provision is clear that an insured's personal property is only covered for damages caused by the 16 listed perils, this provision of the Policy can be described as providing "specific perils" or "named perils" coverage. See 7 Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3d § 101:7 at 101-17 (1997).
A specific perils policy "exclude[s] all risks not specifically included in the contract." Id. In other words, a specific perils policy provides coverage in accordance with the legal maxim "expressio unius est exclusio alterius" (the expression of one thing is the exclusion of the others), and is the converse of an all-risks or open perils policy, which provides coverage for all direct losses not otherwise excluded. See, 7 Russ & Segalla, supra at 101-17 to 101-18 (); Annot., 30 A.L.R.5th 170 (1995) (). Consequently, in order for there to be coverage for damage to personal property under the Policy, the damage to the personal property must arise out of one of the 16 listed perils. See, Curtis O. Griess & Sons v. Farm Bureau Ins. Co., 247 Neb. 526, 530, 528 N.W.2d 329, 332 (1995) (); Thorell v. Union Ins. Co., 242 Neb. 57, 492 N.W.2d 879 (1992); Barish-Sanders Motor Co. v. Fireman's Fund Ins. Co., 134 Neb. 188, 278 N.W. 374 (1938). See, also, Harrigan v. Liberty Mut. Fire Ins. Co., 170 A.D.2d 930, 566 N.Y.S.2d 755 (1991) (); 10 Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3d § 148:48 at 148-84 (1998) ().
Here, both parties agree that mold is not a listed peril. Therefore, the Policy would not appear to provide coverage for damage to the Poultons' personal property. The Poultons, however, argue that coverage still exists via one of the Policy's resulting loss provisions.
The disputed resulting loss provision is found in "SECTION I—LOSSES NOT INSURED," and states, in relevant part:
1. We do not insure for any loss to the property described in Coverage A which consists of, or is directly and immediately caused by, one or more of the perils listed in items a. through n. below, regardless of whether the loss occurs suddenly or gradually, involves isolated or widespread damage, arises from natural or external forces, or...
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